RPT-Brazil's clean energy system could get dirtier amid threat

(Repeats Monday item to additional subscribers with no changes; previous story carried POINT CARBON headline tag)

* Below-normal rains depleted reservoirs at hydro facilities

* Government had to tap into network of thermoelectric units

* Experts see increasing use of natural gas in years to come

By Marcelo Teixeira

SAO PAULO, Jan 15 (Reuters Point Carbon) - Brazil has long boasted about having one of the world's cleanest energy grids due to its heavy use of hydro power, but a recent threat to its water supply is sending the country to the brink of energy rationing, raising concerns that Brazil will turn to more carbon-intensive energy sources to fuel its growing thirst for energy.

Below-normal rains since November have depleted reservoirs at hydroelectric facilities to critical levels while consumption hits its seasonal peak.

The current situation has brought back memories of Brazil's 2001 energy crisis, when factories and residences were forced to slash consumption amid country-wide blackouts.

But more than a decade later Brazil's situation has become more complex, with energy consumption over 40 percent higher and Brasilia under pressure to sustain its fast, but low-carbon economic growth.

Energy use jumped 40 percent during the eight years of President Luiz Inacio Lula da Silva's government due to more inclusive social policies that lifted 30 million people out of poverty. Brazil's energy demand is expected to grow another 50 percent by 2020.

New air conditioning equipment, for example, can easily be seen today at Rio slums, as people take advantage of easier credit lines to cool off the harsh summers.

Brazil has a voluntary target to reduce greenhouse gas emissions by at least 36 percent by 2020. With almost 70 percent of its electricity coming from hydro generation, the country has pledged to keep its energy matrix as clean as possible, but that is increasingly looking like a difficult task.

Current President Dilma Rousseff introduced new mechanisms to Brazil's electric sector when she served as energy minister during Lula's first term, seeking to avoid a repetition of the 2001 crisis.

A system of auctions for future delivery of electricity was introduced, as well as a network of emergency thermoelectric plants.

But that network, which was only meant to be used occasionally, is in full swing today, with Brazil scrambling to secure supplies of diesel and natural gas, or paying premiums for expensive cargoes of liquefied natural gas (LNG) in the international market.

FUTURE WITH MORE GAS

In 2011, the share of heavier emitting thermoelectric production more than doubled from 6 percent of total electricity in 2001 to 15 percent.

"Brazil says in its National Climate Change Plan it wants to reduce (the share of thermal electricity) in the energy matrix to 12 percent. I don't see how it could happen," said Ronaldo Seroa da Motta, a climate and energy researcher at Rio's Federal University (UFRJ).

Brazil is currently using all of its thermoelectric energy generating base of 14,000 megawatts.

Motta is worried that this will became the norm, not the exception, as the country prepares to host big events such as the Fifa World Cup in 2014 and the Olympics two years later and tap giant gas reserves discovered off the coast, in the sub-salt layer.

"The current situation is showing we have a matrix that has a chance of becoming more dependent on natural gas," he said.

A study released during Doha's climate talks last November said GHG emissions from the energy sector in Brazil would outpace, by the first time, those from deforestation in 2012, as the country succeeds to reduce forest destruction and the economy, although slow last year, continues to grow.

Greenhouse gas (GHG) emissions from land use change in Brazil dropped 64 percent from 2005 to 2011, while energy use emissions rose 33 percent in the same interval.

REASONS FOR THE VULNERABILITY

The unpredictability of rainfall, which can compromise hydroelectric supply, is a common problem but the current crisis reveals that the government failed to complete in time work that could help avoid the current tightness, critics say.

"We have big wind farms ready to operate in the Northeastern, but they still cannot be connected to the grid for lack of transmission lines," said Adriano Pires, an energy expert heading the think tank Brazilian Infrastructure Center.

Pires says another aspect of the current crisis was the fact hydro units built recently had to sharply reduce the size of reservoirs due to environmental regulations, leading to a smaller potential to store energy (water).

That is the case, for example, of big, controversial hydro units being constructed in the Amazon, such as the Jirau, at Madeira River, and Belo Monte, at Xingu River.

Even with that, some analysts say some type of energy rationing is inevitable when the country enters the mid-year dry season, since a recovery of the extremely low levels of reservoirs on major hydro power plants would require double the amount of rains that normally fall in the country in the first semester.

That possibility is still denied by the government.

"Brazil holds a firm and secure energy stock, fully capable of responding to demand," said energy minister Edson Lobao last week in a disputed press conference in Brasilia. (Editing by Valerie Volcovici and Rory Carroll)